McDonald’s unveiled an upgraded online-to-offline (O2O) strategy in the Chinese mainland over the weekend, aiming to link more stores to digital hardware and personalized products across the nation. According to the plan, the strategy is customer-focused and digital-driven, and customers can experience digital ordering, touch-screen services and mobile payments. Further, customers can enjoy personalized products, such as burgers and desserts. The app is expected to be available nationally next year…Full Article: ECNS.cn Dec 2016

Key Point

  • McDonald’s China plans to roll out its digital O2O strategy in 1,000 restaurants (~40% of its restaurants) located across 13 Chinese cities.

ChinaAg Comments

  • In December 2016, McDonald’s selected USA’s Carlyle Group and its Chinese partner CITIC Group to purchase its franchises in mainland China and Hong Kong for approximately US$2 billion. The bidding prices for McDonald’s China fell roughly from US$3 Billion to US$2 Billion after McDonald’s decided to retain a 25% stake. At the same time, McDonald’s decided to not sell its South Korean fast food outlets.
  • In October 2016, Wumart’s bidding partner, the California-based private equity firm TPG Capital, exited the bidding process for McDonald’s China. The remaining bidders included Bain Capital and Green-Tree Hospitality (partners), Carlyle Group and CITIC Group Corp. (partners), Wumart Stores Inc. (former partner of TPG Capital), and Beijing Sanyuan Group (see  Beijing Capital Agribusiness Group).
  • In June 2016, McDonald’s Corporation was exploring selling its mainland Chinese and Hong Kong stores. Potential bidders include Bain Capital, TPG Capital, Carlyle Group, Beijing Capital Agribusiness Group, and GreenTree Hospitality.
  • In April 2015, McDonald’s announced it would close dozens of its restaurants in mainland China. As of mid-2015, McDonald’s China had more than 2,000 restaurants.
  • In November 2014, McDonald’s China’s supply chain came under increased scrutiny after the US Department of Agriculture approved a genetically modified (GM) potato developed by J.R. Simplot, a McDonald’s supplier.
  • In August 2014, McDonald’s in Hong Kong stopped selling fresh corn cups, green salad and fresh lemon tea as these items were primarily sourced from OSI processors in Hebei and Gaungzhou.
  • In July 2014, Shanghai Husi, a division of US-based OSI Group LLC, was found to have sold expired meat to McDonald’s, Pizza Hut, Papa John’s, Seven-Eleven and FamilyMart (Japan-based convenience store).
  • Founded in 2009 and headquartered in Beijing, Beijing Capital Agribusiness Group is a conglomeration of Beijing Sanyuan Group (Dairy), Beijing Huadu Group (Poultry), and Beijing Dafa Livestock. Beijing Sanyuan (SHA:600429) is its only publicly traded company in the group and was the only major dairy that was not implicated in the 2008 melamine scandal.
  • Founded in 1994 and headquartered in Beijing, Wumart is one of China’s leading retail chains. Their outlets are primarily located in the northern provinces of Beijing, Zhejiang, Tianjin and Hebei.
  • In October 1990, McDonald’s opened its first restaurant in mainland China (Shenzhen, Guangdong Province). In April 1992, McDonald’s opened its first restaurant in Beijing.
  • In 1975, McDonald’s opened its first restaurant in Hong Kong.

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